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Last Updated: June 13, 2018
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Market Watch

Headline crude prices for the week beginning 11 June 2018 – Brent: US$74/b; WTI: US$66/b

  • Oil prices held their ground, as dissenting voices within OPEC point to the difficulty of agreeing on an output boost at the upcoming meeting in Vienna.
  • Unofficial requests from the US to key OPEC members to hike output raised eyebrows last week, with Saudi Arabia, Kuwait, the UAE and Algeria looking likely to band together with Russia to push for a supply increase.
  • With Saudi Arabia boosting its daily oil output in May by 162,000 b/d to 10.03 mmb/d – the highest level since October 2017 – individual output rises already look like they are beginning.
  • However, Iraq’s oil minister said that OPEC should not be influenced by pressure to pump more oil, warning that unilateral decisions could lead to the collapse of the fragile alliance within the OPEC group.
  • This complicates matters ahead of the bi-annual meeting in Vienna, with Iraq likely to side with Iran and Venezuela on not raising output, as well as OPEC’s reported refusal to discuss US sanctions on Iran at the meeting.
  • Meanwhile, Venezuela is struggling with a huge crude export backlog, reportedly almost a month behind delivering crude to its customers, putting PDVSA in danger of declaring force majeure on shipments.
  • In the US, growing output in the Permian is causing another bottleneck – labour shortages, with some firms reportedly doubling pay to attract workers.
  • The US active rig count continues to grow, though the rise has been stemmed by the recent fall in crude prices. One new oil and one new gas rig entered service last week, bringing the total number to 1,062.
  • Crude price outlook: A successful initial meeting between North Korea and the US in Singapore should see some political risk abate, but the direction of prices is dependent on whether or not OPEC can come to an agreement. We expect prices to remain steady at US$74-75/b for Brent, and US$64-65/b for WTI.

Headlines of the week


  • Iran and Iraq have begun oil swaps using Kirkuk crude – to be refined in Iran’s Kermanshah and shipped in equal amounts back to Iraq’s southern ports – as Tehran looks for way to circumvent US sanctions with its Arab ally.
  • Qatar Petroleum has bought a 30% in two ExxonMobil subsidiaries in Argentina, gaining access to seven blocks in the promising Vaca Muerta play.
  • ExxonMobil has completed its purchase of half of Equinor’s interest in the BM-S-8 offshore block in Brazil, part of the pre-salt Carcara oil field.
  • Saudi Aramco has raised pricing on key crude grades for Asia to their highest levels since 2014, facing less competition for market share from Iran and Venezuela as well as healthy demand across key markets.
  • Argentina looks set to offer 48 blocks in its first ever upstream licensing round in November, attracting attention from Anadarko, CNOOC and Petronas.
  • Production at the giant Kashagan offshore field in Kazakhstan should hit its target of 370,000 b/d by the end of the year, and could naturally hit as much as 500,000 b/d as partners on the project mull a second development phase.


  • China’s crude oil imports in May eased slightly to 9.2 mmb/d after hitting a record 9.7 mmb/d in April, as key refineries entered maintenance and plants in Shandong were ordered to scale back to ensure blue skies in Qingdao.
  • The new Total-Borealis-NOVA joint venture, Bayport Polymers, has broken ground on its new US$1.7 billion ethane cracker in Port Arthur, Texas. 
  • Vietnam’s second refinery Nghi Son expects to export its first petrochemical shipment this month, entering full operations by August 2018.
  • Kazakhstan is aiming to rival Russia in supplying fuel products to Central Asia following the planned upgrade of its refineries, with the government considering lifting a statewide ban on light oil product exports.

Natural Gas/LNG

  • ExxonMobil and Rosneft have agreed to a capacity of at least 6.2 mtpa for their joint venture US$15 billion Far East LNG project in Sakhalin.
  • The Philippines’ Phoenix Petroleum has agreed to partner with CNOOC to build an LNG import terminal in the country, which is separate from the government’s efforts to establish infrastructure to replace Malampaya gas.
  • Australia’s AIE, together with Japan’s JERA and Marubeni, have proposed building an LNG import terminal at Port Kembla near Sydney to ease the ongoing natural gas supply crunch along Australia’s east coast.
  • Commercial operations at the Golar LNG FLNG project in Cameroon have begun, using an oil tanker reconverted in the Hilli Episeyo FLNG vessel.
  • Poland is aiming to complete the new Baltic Pipe gas pipeline to Norway via Denmark by 2022, as it aims to reduce reliance on Russian gas.
  • Eni is on track to deliver first gas from its operations in Ghana this month, which should be enough to double the country’s national output by year-end.
  • Oil Search has reportedly hit gas at the Kimu 2 wells in the interior of Papua New Guinea, within the target Alene reservoir.


  • India’s private oil retailer Essar Oil has been rebranded as Nayara Energy at a recent meeting of shareholders, as part of a corporate repositioning.

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December, 01 2021
Royal Dutch Shell Poised To Become Just Shell

On 10 December 2021, if all goes to plan Royal Dutch Shell will become just Shell. The energy supermajor will move its headquarters from The Hague in The Netherlands to London, UK. At least three-quarters of the company’s shareholders must vote in favour of the change at the upcoming general meeting, which has been sold by Shell as a means of simplifying its corporate structure and better return value to shareholders, as well as be ‘better positioned to seize opportunities and play a leading role in the energy transition’. In doing so, it will no longer meet Dutch conditions for ‘royal’ designation, dropping a moniker that has defined the company through decades of evolution since 1907.

But why this and why now?

There is a complex web of reasons why, some internal and some external but the ultimate reason boils down to improving growth sustainability. Royal Dutch Shell was born through the merger of Shell Transport and Trading Company (based in the UK) and Royal Dutch (based in The Netherlands) in 1907, with both companies engaging in exploration activities ranging from seashells to crude oil. Unified across international borders, Royal Dutch Shell emerged as Europe’s answer to John D Rockefeller’s Standard Oil empire, as the race to exploit oil (and later natural gas) reserves spilled out over the world. Along the way, Royal Dutch Shell chalked up a number of achievements including establishing the iconic Brent field in the North Sea to striking the first commercial oil in Nigeria. Unlike Standard Oil which was dissolved into 34 smaller companies in 1911, Royal Dutch Shell remained intact, operating as two entities until 2005, when they were finally combined in a dual-nationality structure: incorporated in the UK, but residing in the Netherlands. This managed to satisfy the national claims both countries make on the supermajor, second only to ExxonMobil in revenue and profits but proved to be costly to maintain. In 2020, fellow Anglo-Dutch conglomerate Unilever also ditched its dual structure, opting to be based fully out of the City of London. In that sense, Shell is following the direction of the wind, as forces in its (soon to be former) home country turn sour.

There is a specific grievance that Royal Dutch Shell has with the Dutch government, the 15% dividend tax collected for Dutch-domiciled companies. It is the reason why Unilever abandoned Rotterdam and is now the reason why Shell is abandoning The Hague. And this point is particularly existentialist for Shell, since its share prices has been battered in recent years following the industry downturn since 2015, the global pandemic and being in the crosshairs of climate change activists as an emblem of why the world’s average temperatures are going haywire. The latter has already caused the largest Dutch state pension fund ABP to stop investing in fossil fuels, thereby divesting itself of Royal Dutch Shell. This was largely a symbolic move, but as religious figures will know, symbols themselves carry much power. To combat this, Shell has done two things. First, it has positioned itself to be at the forefront of energy transition, announcing ambitious emissions reductions plans in line with its European counterparts to become carbon neutral by 2050. Second, it is looking to bump up its dividend payouts after slashing them through the depths of the Covid-19 pandemic and accelerating share buybacks to remain the bluest of blue-chip stocks. But then, earlier this year, a Dutch court ruled that Shell’s emissions targets were ‘not ambitious enough’, ordering a stricter aim within a tighter timeframe. And the 15% dividend tax remains – even though Prime Minister Mark Rutte’s coalition government has been attempting to scrap it, with (it is presumed) some lobbying from Royal Dutch Shell and Unilever.

As simplistic it is to think that Shell is leaving for London believes the citizens of the Netherlands has turned its back on the company, the ultimate reason was the dividend tax. Reportedly, CEO Ben van Buerden called up Mark Rutte on Sunday informing him of the planned move. Rutte’s reaction, it is said was of dismay. And he embarked on a last-ditch effort to persuade Royal Dutch Shell to change its mind, by immediately lobbying his government’s coalition partners to back an abolition of the dividend tax. The reaction was perhaps not what he expected, with left-wing and green parties calling Shell’s threat ‘blackmail’. With democracy drawing a line, Shell decided to walk; or at least present an exit plan endorsed by its Board to be voted by shareholders. Many in the Netherlands see Shell’s exit and the loss of the moniker Royal Dutch – as a blow to national pride, especially since the country has been basking in the glow of expanded reputation as a result of post-Brexit migration of financial activities to Amsterdam from London. The UK, on the other hand, sees Shell’s decision and Unilever’s – as an endorsement of the country’s post-Brexit potential.

The move, if passed and in its initial stages, will be mainly structural, transferring the tax residence of Shell to London. Just ten top executives including van Buerden and CFO Jessica Uhl will be making the move to London. Three major arms – Projects and Technology, Global Upstream and Integrated Gas and Renewable Energies – will remain in The Hague. As will Shell’s massive physical reach on Dutch soil: the huge integrated refinery in Pernis, the biofuels hub in Rotterdam, the country’s first offshore wind farm and the mammoth Porthos carbon capture project that will funnel emissions from Rotterdam to be stored in empty North Sea gas fields. And Shell’s troubles with activists will still continue. British climate change activists are as, if not more aggressive as their Dutch counterpart, this being the country where Extinction Rebellion was born. Perhaps more of a threat is activist investor Third Point, which recently acquired a chunk of Shell shares and has been advocating splitting the company into two – a legacy business for fossil fuels and a futures-focused business for renewables.

So Shell’s business remains, even though its address has changed. In the grand scheme of things, never mind the small matter of Dutch national pride – Royal Dutch Shell’s roadmap to remain an investment icon and a major driver of energy transition will continue in its current form. This is a quibble about money or rather, tax – that will have little to no impact on Shell’s operations or on its ambitions. Royal Dutch Shell is poised to become just Shell. Different name and a different house, but the same contents. Unless, of course, Queen Elizabeth II decides to provide royal assent, in which case, Shell might one day become Royal British Shell.

End of Article 

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